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Fundamentals of Operations Management, 4/e
Mark M. Davis, Bentley College
Nicholas J. Aquilano, University of Arizona
Richard B. Chase, USC, School of Business

Book Preface

Operations management is an evolving discipline. Just as the U.S. economy was once largely dependent upon manufacturing for its growth, the field of operations once focused almost exclusively on manufacturing concerns: what tools can be used and what techniques can be applied to produce high-quality good efficiently and profitably. In the last 20 years, however, the operations landscape has changed. With the onset of a truly global economy, and developments in technology that have been arguably revolutionary in scope, the types of industries upon which the U.S. economy depends have broadened and changed, and the way in which companies operate has changed as well.

Not surprisingly, the definition of operations management, and the way it is described and viewed, has changed. No longer can operations management be studied apart from other functional areas of the organization, such as finance or marketing. Nor is it possible these days to dismiss the operations function as being irrelevant to a company's ability to compete. Finally, the importance of operations management is no longer confined to manufacturing concerns. The rise of service industries as a staple of our economy, and the need for any producer of goods or services to deliver high-quality service to its customers, has cast a new light on the importance of operations in a wide new variety of fields and thrown into sharp perspective the fact that well-managed operations are critical to all types of industries.

A major goal of the fourth edition of Fundamentals of Operations Management has been to reflect these changes in our business and economic landscape. In particular, great care has been taken to ensure that the increasing importance of services has been appropriately emphasized throughout the book. While strong coverage of services always has been a hallmark of Fundamentals of Operations Management, this coverage has become even stronger and better integrated with the fourth edition. Whenever possible, examples from a variety of service operations have been drawn upon to support and enhance the discussion, providing students with a more contemporary view of the operations environment.

Another goal has been to record and analyze the impact of technology on operations. As we embark on the twenty-first century, technology, and especially information technology, continues to change the ways in which companies do business. And we are seeing only the tip of the iceberg. Technology will continue to advance in the form of faster and more accurate transmission lines, more powerful computers, and larger electronic data storage equipment that is capable of storing pentabytes of data. At the same time, unit costs in all of these areas will continue to decrease.

In addition, barriers to trade across national borders continue to be lowered with the creation of regional free trade zones such as the European Union, the North American Free Trade Agreement (NAFTA), and Mercursor (a free trade agreement among several South American countries).

The combination of advances in technology and lower trade barriers has facilitated the world's economies to continue their trend toward a single global village or global landscape. Both customers and suppliers now exist in every corner of the world, with no company being immune to international competition. In such a hypercompetitive environment, it is imperative that managers continue to develop innovative applications for these new technologies as they become available. This ever-changing environment has a significant impact on the operations management function in terms of how goods and services are produced and delivered.

Besides the strengthening and further integration of the coverage of services, which continues to distinguish the perspective of this book from others in the field, the fourth edition provides
  • New coverage and emphasis on several topics in operations management that are currently high-priority issues with both business and operations managers. Two new chapters are devoted to this coverage: new product and service development (Chapter 3) and the role of technology in operations management (Chapter 4).
  • A pedagogical feature, titled "Managerial Issues," which are short applications-oriented discussions of operations-related issues in real organizations. The purpose of these discussions is to act as a kind of real-world analogy to the conceptual expositions in each chapter.
  • The continued development of relevant concepts in operations management that are now recognized as critical success factors in business. These include yield management (Chapters 15 and 16), which focuses on maximizing capacity utilization and profits in service operations, and supply chain management (Chapter 13), which addresses both the changing role of the supplier and the fact that supply chains are becoming longer as firms now look to the four corners of the world for suppliers.
  • Recognition that the operations function in every organization involves individuals and that their role is changing as are the organizations themselves. As part of these changes, there is an increasing emphasis on teamwork (Chapters S3 and 10).
  • Demonstration of how operations management needs to be fully integrated with the other functional areas within an organization, and that many of the operations management tools are being applied in these other functional areas, such as marketing, engineering, and finance. For example, business process analysis can show engineering managers how to accelerate the development and introduction of new products (Chapters 3 and 4), and just-in-time (JIT) concepts (Chapter 14) are used to market mass-customized products that can be delivered to customers with minimal delays. These tools and techniques from operations management are also now used in a wide variety of new applications that go far beyond the walls of the traditional factory. As an illustration, quality management tools (Chapter S6) such as statistical process control (SPC) are now used to predict impending medical problems for patients with asthma or congestive heart failure.
  • Finally, coverage of services that reflects the landscape of contemporary business.

We tried to do this in a brief and interesting way, focusing on core concepts and utilizing quantitative techniques only where necessary while making the mathematics intuitive and less formal.

Specific Objectives of This Book

Most students do not major in operations management. In fact, many schools and colleges do not even offer a major in operations management. Nevertheless, it is important for you to understand how the operations management function contributes to the overall success of an organization. The reasons are twofold. First, understanding how the different elements within the OM function fit into the overall organizational structure will provide you with a broader perspective that, in turn, will allow you to do your own job better. In addition, as we stated above, the concepts developed initially within the OM function have application in all of the other functional areas within an organization. Understanding and applying these tools and concepts can improve your ability to be both effective and efficient in the way you do your work. Many students don't appreciate the importance of operations management until after they graduate and begin work. For example, consider the "hot" employment area of information technology (IT). Specialists in IT really should have a working knowledge of the best practices in process management, forecasting, quality control, and project planning to correctly apply many of the software tools that they will encounter on the job. For these reasons, the specific objectives of this book are to
  1. Introduce the various elements that comprise the field of operations management, and some of the new and evolving concepts within OM.
  2. Identify some of the OM tools and concepts that can be applied to a wide variety of situations, including non-OM-related areas.
  3. Develop an appreciation of the need for interaction between operations management and the other management functions within an organization.
  4. Explain the role of technology in operations management and its impact on the different OM elements.
  5. Describe the growing trend toward globalization among firms and how it affects operations management.
  6. Demonstrate that manufacturing and services are becoming more integrated within companies.
  7. Provide an integrated framework for understanding the field of OM as a whole and its role in an organization.

With respect to the last objective, our goal is to demonstrate that operations management is not just a loosely knit aggregation of tools but rather a synthesis of concepts and techniques that relate directly to operating systems and enhance their management. This point is important because OM is frequently confused with operations research (OR), management science (MS), and industrial engineering (IE). The critical difference between OM and these fields is this: OM is a field of management, whereas OR and MS are branches of applied mathematics and IE is an engineering discipline. Thus, while operations managers use the tools of OR and MS in decision making, and are concerned with many of the same issues as IE, OM has a distinct business management role that differentiates it from OR, MS, and IE.

Special Features of the Book

In an attempt to facilitate the learning process, we have incorporated several pedagogical features, including

  • Chapter objectives. At the beginning of each chapter, a list of objectives is presented to highlight the important concepts on which the chapter focuses.
  • Vignettes. Each chapter begins with a short vignette that shows how the chapter topic is actually applied in a real-world setting, to create student interest for the chapter material.
  • Application of OM concepts. Examples of how many of the OM concepts presented in this text are applied in actual business situations are provided throughout the text. The use of real-world examples reinforces the critical role of operations management, showing how it contributes to the overall success of an organization. These applications take several forms, including the opening vignette to each chapter and Operations Management in Practice boxes, as well as in the numerous examples that are included throughout the text itself.
  • Internet exercises. The Internet continues to be a powerful tool for obtaining and disseminating information, and this information is constantly changing. Where appropriate, an Internet exercise is provided at the end of a chapter to encourage students to obtain the latest information on a particular topic.
  • The application of Excel® spreadsheets. Again, where appropriate, examples are provided using Excel® spreadsheets that encourage the student to explore alternative solutions.
  • Highlighting links with other functional areas. Ideas and processes flow easily across traditional functional boundaries in successful organizations, often to the point where it is practically impossible to determine where one function leaves off and another begins. To emphasize this integration within organizations, icons are used throughout the text to highlight examples of how OM is linked to other functional areas.
  • Global perspective. Another emphasis of the book is a stress on the global impact of operations today; where appropriate, we show how the concepts apply in a global context. Special icons are used in the book to highlight this area.
  • Margin definitions. Key terms are in boldface when first defined and definitions added in the margin. At the end of the chapter these key terms are listed with page numbers for quick student reference.
  • Full-color art. This fourth edition includes photos and exhibits to enhance the visual appeal and interest of students, to clarify and extend the text discussions, and to help students see operations in action.
  • Examples with solutions. Examples follow quantitative topics and demonstrate specific procedures and techniques. These are clearly set off from the text and help students understand the computations.
  • Formula review. Key formulas and equations are numbered within each of the more quantitative chapters and are repeated in summary form at the end of those chapters for easy student review.
  • Solved problems. Representative example problems are included at the end of appropriate chapters. Each includes a detailed, worked-out solution and provides another level of support for students before they try homework problems on their own.
  • Review and discussion questions. These questions allow students to review the chapter concepts before attempting the problems and provide a basis for classroom discussion. Suggested responses are included in the Instructor's Manual.
  • Problems. A wide range of problem material follows each chapter, asking students to solve realistic, interesting problems.
  • Cases. Located at the end of most chapters, short cases allow students to think critically about issues discussed in the chapter. These also can provide good classroom discussions or provide a capstone problem for the chapter. We've included both long and short cases such as Kristen's Cookie Company from Harvard.

We also have tried to practice what we preach. In applying the quality concept of continuous improvement, we have attempted to incorporate many of the suggestions made by our reviewers.

There is an old Chinese proverb that states, "May you live in interesting times." Like it or not, from an operations management perspective, those "times" are now and we should take full advantage of the opportunity-and enjoy it while doing so!